PS3 manufacturing costs down around 70%

CFO Nobuyuki Oneda tells analysts Sony has cut console-making expenses by over two-thirds since 2006; unofficial iSuppli estimates point to $252 production price, resparking PS3 Slim speculation.

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Yesterday, Sony issued a dispiriting April-June earnings report, which showed quarterly PlayStation 3 sales fell from 1.6 million to 1.1 million. The PS3's slowdown is ironic, as it appears to have come just as Sony got its console manufacturing house in order. In an English-language conference call following the earnings report, Sony CFO Nobuyuki Oneda was asked by an analyst to "give a sense of how much you've reduced the [PS3] cost to build since inception."

Sony CFO Nobuyuki Oneda

Oneda's response was vague--at first. "The cost reductions since we introduced the PS3 are very substantial and on schedule," explained the executive. "We don't disclose how much of the PS3 cost reduction was specifically achieved during the past two years. But that is on schedule."

Then, Oneda decided to throw a number out. "About 70 percent, roughly speaking," he said.

As its CFO indicated, Sony does not give out an exact production cost for the PS3. However, a hardware research firm has offered unofficial estimates on a regular basis for several years. Last December, iSuppli estimated that Sony spent $448.73 in parts and labor to make each $399 80GB PlayStation 3. The number was down from an estimated production cost of the now-discontinued 60GB PS3 model, which had backwards compatibility with PS2 games. iSuppli estimated that model cost $690.23 to make in mid-2007, when it was priced at $499, and $840.35 to make at its November 2006 launch, when it cost $599.

If Oneda's 70 percent figure is applied to iSuppli's $840.35-per unit launch-cost estimate for the PS3 (which has not been confirmed by Sony), the savings are a substantial $588.25 per unit. By that calculus, Sony would spend $252.10 to make each new PS3, the base model of which sells for $399. Theoretically, that would generate a $146.90 profit per console, not including packaging, transportation, and other costs.

While the combination of iSuppli estimates and Oneda's comments are interesting, they are by no means official. Indeed, earlier this month, Sony CEO Sir Howard Stringer appeared to scoff at the idea that PS3 hardware was currently profitable. In response to Activision CEO Bobby Kotick's call for a price cut for the console, the Wales-born Stringer quipped, "I lose money on every PlayStation I make--how's that for logic?" Furthermore, the newly formed division that contains Sony Computer Entertainment lost ¥39.5 billion ($415.6 million) last quarter--more than Sony's overall loss of ¥37.1 billion ($390.3 million)

The photo that launched 1,000 PS3 Slim rumors.

However, there's a good chance that Oneda was referring to PS3s Sony is making right now, not last quarter. And one possible reason for the "substantial" PS3 production savings could be a reduction in materials resulting from a shrinking of the console's form factor--which has already been widely rumored. Sparked by an apparent photo leak in May, the past few months have seen widespread, repeated speculation about a 120GB "PS3 Slim," similar to the slimline PlayStation 2 introduced in late 2004. Though Sony offered no comment on the photos, a mysterious Taiwanese law firm sent cease-and-desist letters to several online news outlets that posted them.

Discussion

777 comments
jdolly
jdolly

@ Irve - You just said COD4 has better graphics than Killzone 2. No game looks better than Killzone 2 other than Crysis that you can buy right not. Point 2:HE DID NOT SAY It has to be better resolution to be a good looking game HE SAID 640p Resolution is below par. Which it is. Resolution makes a huge difference to how a game looks, It's not the only thing but it is something. You have no point, Learn to read, kxthxbai

fatpumba3
fatpumba3

I might buy it if the price drops.

X_Box_Killer
X_Box_Killer

The cost of the PS3 production going down should not be a surprise to anyone. When you start removing things like PS2 compatibility, SD card reader and a few of the USB ports, the cost to manufacture them should go down. I wouldn't count on there being a price drop though. It took two years for Sony to lower the price of the PS2 when they switched to the slim model.

Irve
Irve

@MOBS are you 12 ? Does COD4 look better than all those other 720p native FPS games on the market YES .... so why is reducing resolution to improve frame rates important if games can look better than other games at a low res ? never once have i defended Halo 3 .. it doesn't look all that at all they could have made it 1080p and it would still look average and yet your still ranting about the res of Halo then we have "uninformed nonsense" eh ... "This is true multiplatform development, There's no lead platform here" Infinity ward studio founder Grant Collier on COD4 COD4 is at 600p simply to give it a solid 60fps frame rate. your such a fanboy.. look who's bringing in a game that hasn't even been released just to prove the PS3 is more powerful than the 360 ... WHO CARES !! who... cares let me give you a little advice you don't have to scream and shout about how bad another console is or make up stuff to prove you've got the best machine... you've got a Ps3 and you've got good games to play on it .. and if Sony bring down the price of the machine due to lower costs you'll have lots and lots of other people to play good games with.

MOBS
MOBS

@Irve Yeah I read what you typed. The problem is everything you type s uninformed nonsense. Call of duty 4 was 600p on XBOX 360 and Ps3, because Xbox couldnt handle any resolution higher. I COD 4 was lead developed on Xbox 360 first from the ground up, then PORTED to the PS3 as is. Not only that but your 360s FLAGSHIP 1st party FPS , HALO 3 is a MEASELY 640p. ANYONE who says resolution doesn't matter in the HD ERA of gaming is a twit, pure and simple. 3rd party games are of no importance in hardware comparisons unless they are made from the ground up for their respective systems, LIKE NINJA GAIDEN 2. NG 2 on 360 runs a 576p NATIVE , and the FRAMERATE STILL SLOWS to a crawl when the action gets heavy. Ninja Gaiden Sigma 2 on PS3, however, runs a 720p NATIVE and is documented to have a faster framerate . Why are you still talking? you have no clue, give up.

Irve
Irve

@MOBS do you actually read what people type ?? ok FACT halo is 640p , Killzone is 720p ... CALL OF DUTY 4 is 600p on the PS3 600p !!! and for my money COD4 is the best looking game if you bothered to read what i put down i'm telling you the resolutions are meaningless if the engine is good enough. your calling me an xbox troll .. when all i've done on this page , aside from pull you up on the complete rubbish your spouting, is say i want a PS3 ! be a fanboy all you want .. but when someone pulls you up on it at least have the decency to admit when your wrong.

redskinStu
redskinStu

I'm happy with my PS 3. Very reliable, fast loads, no freeze-ups (except Oblivion, and that's no surprise). Want to see something funny? Go to YouTube, type in "Red Ring of Death."

D3A7HJ0K3R
D3A7HJ0K3R

@scarface_dm, didn't you mean "just get RROD and E74 and disc tray failures and bricking, so you can play 5 ON FRICKIN' 5 on gears, and save money by spending extras for repairs and accesories Micro$oft was to lazy to put in the first place."

D3A7HJ0K3R
D3A7HJ0K3R

@TWilliamz, yeah but you wouldn't need a three year warranty if the 360 wasn't a volcano.

MOBS
MOBS

Halo 3 SUCKS ONLINE!!!! WHY I borrowed ( without asking) my brothers Halo 3 a few months ago. Much to my shagrin, I CAN'T PLAY ONLINE UNLESS I BUY BUNGIES OVERPRICED DLC!!!! Screw that , screw bungie , they are not getting one red cent of my money. That would defeat the purpose of me stealing my brothers copy. BUNGIE sucks, the whole match making system blows . I sholud be able to make whatever room I want, and ANYBODY ONLINE should be able to join, not just my friends. The problem is BUNGIE thinks everyone on the planet are as much of a pathetic GEEK as they are, and RANK is oh- so- important to EVERYONE. It IS'NT. They exert too much control on live.

mayceV
mayceV

@MOBS That thier highest and best looking Res. I've tried 1080i but 720p looks much smoother.

solaris91
solaris91

yeh killzone 2 has graphics better than that of any game i've played to date but you cant compare the two games purely because of graphics... however, the graphics on halo are fine although not the best...i havnt played either game online but to my understanding, halo 3 is the game played by the most people online so with regard to your comment, i guess people are having fun playing on so called 'crap graphics'...

MOBS
MOBS

@Irve Yet another XBOX troll who doesnt think before he types. Think for a second einstein, is either Virtua Tennis or NBA street an Xbox 360 exclusive???? Laughably pathetic youre even trying to drag Xbl arcade games into the equation. Fact, Halo 3 is 640p and thus sub par for this generation. . If the 360 ATI chip was so great, they should have handled 720p NATIVE Halo 3 no problem, or delay the game until they could cram it in there. Killzone 2 graphics just BEGIN at 720p , the engine does multiple passes to add bump mapping , self shadowing, particle effects, plus superior ANIMATION to Halo 3 . All Halo 3 managed was a record/playback feature. Have fun playing back crap graphics. Can XBL arcade games compare to Killzone 2 ? Maybe if you're an idiot.

kamizuka
kamizuka

what the hell is wrong with you people!? dont hate each other for owning diffrent machine! hate the company that made the machine. i mean, i speak for my self when i say that i hate Ms for making a fragile (easy to break) and i hate Sony for not useing the Blue-ray in a proper way i mean they only made 2 awesome games using Blue-ray (MGS. killzone. those are the ones i liked dont care about the rest)

kamizuka
kamizuka

what @Irve sayed was true the res is not much it is the "engine" thing and how they made the animations

kavadias1981
kavadias1981

They are, flyingteddy. Don't you remember all the great game announcements at E3 this year? I mean, I know they aren't all 1st party but they are exclusives though. I know I'm excited to be owning a PS3 and PSP right now.

kavadias1981
kavadias1981

I own an 80gb PS3 right now but I would happily sell it and pay the difference for a 120gb slim model, if it exists at some point.

Irve
Irve

@MOBS ok .. try reading my post ... i was saying it's pointless picking out 1 game and judging the machine by the res you want to love your PS3 and hate on everything 360 .. that's fine .. but your comments were a load of BS and also shows the pointlessness of dishing out resolutions. If Halo ran at 720p and Killzone at 640p would it make halo look better than killzone .. NEVER ! it's all about what the game engine is designed to do ... and the killzone engine is just miles better ! I get the feeling that the way the Halo engine is designed a true 720p res wouldn't have made it look much better Uncharted 2 looks likly to be the best looking game on any format and i'm thinking if they had to drop the res to 640 to get a playable frame rate it would still be the best looking game "Native 1080p games available for the Xbox 360 include the following 6 titles: [native 1080p] Wolf of the Battlefield Commando 3 [Xbox Live Arcade] [native 1080p] Feeding Frenzy 2 [Xbox Live Arcade] [native 1080p] Portal [Xbox Live Arcade] [native 1080p] Boogie Bunnies [Xbox Live Arcade] [native 1080p] Street Home Court [native 1080p] Virtual Tennis 3 Now are you gonna tell me that the higher resolutions of any of those games makes then the best looking games on 360 ?? finally personally i think COD4 looks better than Killzone2 .. but COD4 on the PS3 runs at 600p ( that's lower than halo ) PROOF that a good engine can look great even at a lower Res.

mayceV
mayceV

the tip on xbox 360 shopping is look at the Input watts if its 202W drop it its defective (xenon) If its 175W its falcon with a faliure rate of 12% if its 150W take that one its Jasper with a failure rate is 1-3%. hope it helps.

flyingteddy
flyingteddy

if there is no price drop then sony please use the cash to make more excellent 1st party games!

jeffokiecorry2
jeffokiecorry2

@TWilliamz Most 30 year olds have heard of a warranty. You don't get a warranty if you buy refurbished Xbox 360's off ebay. Which actually probably means my console broke twice. But it did work perfectly for a year...then it was done. So I switched to PS3. ALSO refurbished... (but off Gamestop so there is a 30 day warranty...not much, but better than nothing.) PS3 is proven to be much more reliable, eh? I am not a gambling man, and I'd rather take less of a risk with a PS3. Especially since I buy things USED. (Except the Wii, which only has a one year warranty, so I had to pay for repairs when the GPU fried...which would imply that I actually use it quite a bit...I do have a family, and I love retro games...which was also a selling point for the PS3 for me.) Thanks for your sarcasm.

TWilliamz
TWilliamz

@jeffokiecorry2 Guess you've never heard of warranty(3yrs)

MOBS
MOBS

@Saxis Basically you arent saying ANYTHING Halo 3 doesnt have HALF the particle effects and special effects filters in the each frame render, so its framerate is irrellevant. A PSP game can run at 60fps, and ALSO doesnt have the effects Killzone 2 has. Common sense wouldve halted you before you type. Bare bones graphics at 60fps (and 640p!! HAHA! ) dont equal Excellent High end rendered graphics at 720p and 30fps. Get a clue. Basically you're just blowing hot air. Final analysis: Sony posted GOOD NEWS they've cut their production cost , and you're just an X-box troll here to rain on their parade.

salxis
salxis

@MOBS 1: I am not saying Halo 3 equals Killzone 2 just because it's running at 60 FPS, I am saying that compensation has to be made if you want to run it at certain spec (720p vs 60fps since that's just the limit of the consoles currently) please don't get into the whole "which game is better" debate, it's all subjective from that point on. 2: Blu-ray doesn't affect graphics, it's just a storage where you shove datas on, sure Blu ray can contain 5.5time(?) amount of data on it, but it doesn't mean it's better graphics. The hardware is always going to be the deciding factor for graphical performances. Larger medium could make PS3 games longer, more cut scenes, more set pieces and more animations etc. but as far as graphical quality goes, it's limited by it's hard ware. (i.e. Crysis is 1 double layered dvd but it's undeniably the best looking game there is right now, by your logic Killzone 2 should look better just because it has larger space) It's all up to the developers if they want to spend the time/money to fully explore the capacity of the blu ray disc by fully occupying the storage space offered.

MOBS
MOBS

@Salxis Think quick !: who cares if Halo 3 is 60 fps if the resolution SUCKS ?? Im sure theyre are 60 fps games on Xbox 1 and PS 2 , that doesnt make them equal or better than Killzone 2. think before you type. @Irve you proven you don't know anything by trying to use a 3rd party game like GTA 4 as a hardware benchmark . 1st party games use the hardware 100% . GTA 4 was a rushjob, they had to delay it nearly a year because Rockstar had trouble PORTING GTA 4 to PS3. Key word here is PORT. Most 3rd party games on PS3 are just 360 PORTS , and dont use PS3 hardware to 1/3 its capacity.

jeffokiecorry2
jeffokiecorry2

@angelGP32 Offering a price break would be great for consumers. But Sony is most likely trying to recoup some of it's operation costs for the past 2 1/2 years... I don't deny a price break would be great, but now that they are FINALLY making a profit after losing so much for their first PS3's. I think it would be hard to justify a drop just yet, even if it would promote more sales... Though I am sure they'll reach a tipping point.

jeffokiecorry2
jeffokiecorry2

@scarface_dm It's really not saving money when you have to buy more than one Xbox 360 because it breaks down...

brendanhunt1
brendanhunt1

"Sony Computer Entertainment lost ¥39.5 billion" i think thats due to the games that are currently being made. (havnt been sold yet)

altair3feb
altair3feb

how are you guys expecting a price cut while the parts cost more than when the ps3 is ready? it's like losing money but to satisfy the people. I hopes it stands on its feet again

brendanhunt1
brendanhunt1

@SalarianChemist 1. actually Firmware Update 2.4 broke very little (and was very little) amount of ps3s due to the type of hard drive, not type of ps3. 2. people were charged the fee of repair. which i think sony should of paid for. but some just rebooted the hard drive for free(at the cost of losing their save data) 3. ps3 at launch had a 0.2% failure rate not 5%

scarface_dm
scarface_dm

Everyone just get a 360, and save money already

Xaviersx
Xaviersx

Well, coupled with a prior Gamespot article from Dec 30, 2008 that reported the production costs (parts and processes) down by an "estimated" 35%, and given a little more time, 70% is an achievable goal for a company looking to cut is losses as well as grow its profits. http://www.gamespot.com/news/6202681.html?tag=result;title;1 Growing profits would be a big part in not lowering consumer pricing but maybe dangling special sales, or holding off to cut competitor offerings at the times of their big releases. For quite a while Sony subsidized the unit costs and they'll probably milk the inbetween time of profit making before PR making. Most companies would. Even Nintendo has had little to no inclination to offer consumers a price drop, especially during the Wii craze. And it wasn't like Sony had a general public conference to announce lower costs, it was kinda dragged out by analyst conference call and slipped onto the floor.

angelGP32
angelGP32

yep. I to love how everything evolves into a flame war when the bigger question of , how the hell can you reduce production cost by 70% and still not be able to offer a price break, remains unanswered and ignored.

SicklySunStorm
SicklySunStorm

this article is mostly speculation and guessing, with no real substance... not even the direct quotes offer any firm indication as to exactly how much the production costs have ACTUALLY been reduced by. I would love to believe that Sony have cut it's production cost per-PS3 down by 70%, but I just don't believe it's true based on the above. An over ambitious Sony exec eager to say what his board and shareholders by giving an "estimated" figure, along with all the other analysts guesses just don't give us any real info at all...

Elbar9423
Elbar9423

Is this new PS3 Slim, going to be better than the old PS3???

WolfGrey
WolfGrey

@SalarianChemist Wow i really wasnt aware.Thanks for all the info man.Really helpful.I have never had a problem with firmware updates thank god.And your right they should offer to pay all that for us.

SalarianChemist
SalarianChemist

@WolfGrey Also, when you say the Xbox 360 "is way overdue for an overhaul," it indicates that you are not aware of the fact that Microsoft has updated the design of Xbox 360 twice over the last 2.5 years. The early launch models of Xbox 360, called "Xenon" were all defective; they have a 100% defect ratio. It is only a matter of time until they become defective. Thankfully, that model has been discontinued for a long time. Unfortunately, the large number of defective consoles for that "particular" model of Xbox 360 play the role of a "Statistical Outlier" that should be eliminated when calculating the excellent performance of current Xbox 360 models on store shelves today. For example, the "Jasper" model of Xbox 360 that has been on storeshelves since 2008 has a defect ratio of only 1% - 3%. It consumes so much less electricity and generates so much less heat that it even has a different power cord. So, there is no doubt that Xbox 360 has already received its major "overhaul."

SalarianChemist
SalarianChemist

@WolfGrey Generally speaking, there are two types of defects with the Playstation 3. 1. The YLOD (Yellow Light of Dead) that you mentioned. 2. Firmware Update problems. For example, Firmware Update 2.4 caused literally hundreds-of-thousands of Playstation 3 consoles to become defective due to the fact that the hard drives used with those models of the PS3 were not compatible with Firmware Update 2.4. The problem with Firmware Update 2.4 was that Sony was not willing to admit such a widespread problem that they were responsible for, which meant the Technical Support people told consumers to send their PS3 consoles in for repair. Even though the PS3 consoles were under warranty, consumers still had to pay for the expensive shipping and insurance costs. This is something that Microsoft pays for the consumers. I personally believe Sony should do the same.

Depresso
Depresso

I hope the slim version comes out soon as I am holding out for it or a price cut on the current one. I am also waiting for real good exclusives to make the plunge.

WolfGrey
WolfGrey

@sj_nehama Lol how true.Cept i enjoy the ps3s selection alot more.Then again im not a huge shooter or sports fan.Which is about 70% of the 360s library.

WolfGrey
WolfGrey

@SalarianChemist Despite the defect ratio i havent really heard of any problems on the ps3.The only one i have heard about is the yellow light of death.Which is very rare.At least it holds up better than the 360 which WAY overdue for a overhaul. @mayceV Good info there.But even though some xbox360 games can run at 1080p the ps3 game versions seem to be alot smoother.

SalarianChemist
SalarianChemist

Now is not a good time to buy a Playstation 3, because everyone in the industry knows the PS3 is on the way at a lower price, with a lower defect ratio. Remember, the current models of the Playstation 3 have a defect ratio of over 5%, which is nearly identical to the PS1 and PS2. This is actually higher than what the industry average is supposed to be. It's long overdue for Sony to release a less expensive, updated version of the PS3.

mayceV
mayceV

[This message was deleted at the request of the original poster]

McGregor
McGregor

WooHoo! time for a PS3 price drop, now everyone can enjoy one!

genbeef
genbeef

"they made a loss on PS3's since day 1 and they kept pumping out new exclusives???? wow, i would have thought a company would close down its studios to save money...........oh well the worlds a better place when not every company is like M$." consoles always operate at a loss with the exception of the wii. and if sony's been operating like this for a while then they've kept it secret from us, the consumers, and been making a small profit all along while playing wounded to excuse themselves from dropping the price: "if i dropped the price then i would be losing money on every playstation i made" -stringer, just two months ago sony the best, most honest company in the world? they wrote the book on dirty business. btw, i can't recall who made the xbox who throughout it's entire cycle ran at a loss, never profitted, was a laughing stock of game financials, yet they still had the cojones to bring out another console called the 360, didn't close down their gaming division knowing full well it was facing two gaming veterans. hermm.....

sj_nehama
sj_nehama

you know, thinking about this, it isnt realistically possible to stop this. Remember the xbox vs ps2 wars? "The xbox is the superior machine" vs "lulzwot? the ps2 has the greatest library ever"...the funny thing is, all in all, this 360 vs ps3 is pretty much the same thing...reversed. Heck, even ATI and NVIDIA traded places...

chaisemon
chaisemon

we never know, maybe microsoft and sony is working together in a secret underground lab! maybe nintendo too! how did they bring it down to 70% anyway without any profit but loss on every console ??? all i know is card readers and 2 usb ports hav been removed and storage space increased. i dont think they cost that much except the new hdd! and i dont think making smaller 45nm chip is less expensive! ps. flame war is fun. dont stop it.. without it the comments section wil b filled with just wise asses. we need fanboy idiots too to make it interesting.

SCOOPYDOGGDOGG
SCOOPYDOGGDOGG

I hate when people go into detail about how a console works just to prove a point. To the average user, its about the finished product and if you look at a game on a 360 and look at the same game on a ps3 then any sane person would notice THEY ARE THE F**KING SAME! I dont give a sh*t if the shadow detail is rendered more precisely or the texture mapping is BLABLABLABLA this sh*t is petty, they are the same, stop whining its a machine built to entertain people, not a religion.